Warstler v. Cibrian, No. WD
| Decision Date | 06 July 1993 |
| Docket Number | No. WD |
| Parties | Richard E. WARSTLER and Ruth E. Warstler, Respondents, v. Pedro CIBRIAN and Estela Cibrian, Appellants. 46753. |
| Court | Missouri Court of Appeals |
Bertica Dominquez-Calbi, Kansas City, for appellants.
Edward A. Coulson, Kansas City, for respondents.
Before LOWENSTEIN, C.J., and TURNAGE and KENNEDY, JJ.
Richard and Ruth Warstler brought suit for breach of a real estate sales contract against Pedro and Estela Cibrian. After a bench trial, the trial court entered judgment for the Warstlers for actual damages and the Cibrians appealed. The Cibrians contend there was no breach but that even if a breach occurred damages should be limited to the $2,000 earnest money deposit as liquidated damages.
Reversed and remanded.
On February 12, 1991, the Cibrians entered into a real estate sales agreement with the Warstlers for the purchase of a home owned by the Warstlers and located at 5423 Northwest Platte Purchase Drive in Platte County for $125,000. Of that amount, $2,000 was to be deposited in a trust account as earnest money, $10,500 was to be paid at closing and the balance of $112,500 was to be paid through financing obtained by the Cibrians. The Cibrians had until March 26, 1991, the date of closing, in order to secure financing. The agreement was contingent upon the Cibrians securing financing and it provided that "time is of the essence."
About one week before the closing date, the Cibrians called their loan officer, Dennis Paul, at Sentinel Federal Savings to inform him that they did not want to proceed with the loan application because of a change in their financial condition. During the telephone conversation, the loan officer asked the Cibrians to provide written notice of withdrawal of the loan application but they refused to do so. The following day, the Cibrians sent a letter to Sentinel Savings stating that they had not intended to withdraw their loan application. Considering that official notice to withdraw the loan application had already been given by the Cibrians, however, the bank withdrew their application and discontinued processing on the loan. There is nothing in the record to indicate that the Cibrians made any efforts to obtain financing from any other bank or lending institution. As a result, the Cibrians failed to secure financing by the closing date pursuant to the terms of the agreement, and consequently, were unable to purchase the property.
After they had withdrawn their loan application and Sentinel Savings had discontinued processing the loan, the Cibrians contacted the real estate agent and indicated that they were no longer interested in the Platte Purchase property and did not want to purchase the property. Despite this ostensible lack of interest, however, the Cibrians made an offer to buy the Warstlers' home for less than the contract price. The Warstlers later sold their home to another buyer for less than the contract price.
The Warstlers brought suit against the Cibrians for breach of the real estate sales contract for failure to purchase the Platte Purchase property pursuant to the terms of the agreement. At the conclusion of the trial, the court entered an order finding that the Cibrians had breached the contract by failing to obtain financing pursuant to the terms of the real estate agreement. The court further found that the Warstlers were entitled to actual damages in the amount of $9,945.
On appeal, the Cibrians contend that they did not breach the contract because they made a diligent effort to secure financing but were unable to do so through no fault of their own.
In reviewing the trial court's decision, this court must affirm the judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or misapplies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).
In this case, the Cibrians assert that the real estate agreement was contingent upon the Cibrians securing financing to purchase the Warstlers' home. As the Cibrians correctly note in their argument, Missouri law imposes the duty of reasonable diligence and good faith on a buyer who enters into a contract containing a financing contingency clause and the buyer has the burden of proving such. Goldberg v. Charlie's Chevrolet, Inc., 672 S.W.2d 177, 178 (Mo.App.1984).
Here, the record shows that the Cibrians applied for a loan with Sentinel Savings soon after entering into the real estate agreement with the Warstlers. Thereafter, the Cibrians experienced a change in their financial condition and notified Sentinel Savings that "they did not feel comfortable proceeding" with the loan application. The Cibrians refused to provide written notice of the withdrawal of their application. At trial, the Sentinel Savings loan officer testified that it was the Cibrians' decision to terminate the application. The Cibrians denied they withdrew their application.
This court defers to the trial court's assessment in determining the credibility of witnesses. In re Estate of Ross, 790 S.W.2d 514, 516 (Mo.App.1990). Obviously, the trial court found the loan officer's testimony credible that the Cibrians had voluntarily withdrawn their loan application. There is nothing in the record to indicate that the Cibrians made any efforts to procure financing at any other facility. The record supports the finding that Sentinel Savings did not reject the Cibrians' loan application, but rather they voluntarily withdrew the application and as a result failed to secure the necessary financing by the closing date as required by the real estate agreement.
The Cibrians further contend that in the event this court finds they breached the real estate contract, the damages to which the Warstlers are entitled should be limited to the $2,000 earnest money deposit as liquidated damages pursuant...
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